The nexus between labor diversity and firm’s innovation

Abstract

In this paper we investigate the nexus between rm labor diversity and innovation using data on patent applications led by rms at the European Patent Oce and a linked employer-employee database from Denmark. Exploiting the information retrieved from these comprehensive data sets and implementing proper instrumental variable strategies, we estimate the contribution of workers' diversity in cultural background, education and demographic characteristics to valuable rm's innovation activity. Specically, we nd evidence supporting the hypothesis that ethnic diversity may facilitate rms' patenting activity in several ways by: (a) increasing the propensity to (apply for a) patent, (b) increasing the overall number of patent applications and (c) by enlarging the breadth of patenting technological elds, conditional on patenting. Several robustness checks corroborate the main ndings.

International Knowledge Spillovers: The Benefits from Employing Immigrants

“…We argue that firms benefit from their increased absorptive capacity to acquire international knowledge -which is in line with a positive impact of ethnic diversity on innovative activity as found by Parrotta et al (2014b).…”

Spillovers from immigrant diversity in cities

“…For instance, particular management decisions or shocks to a plant's capital intensity could simultaneously raise worker productivity while also stimulating changes in the birthplace composition of a workforce. Perhaps most plausibly, establishments might receive positive shocks to human capital that occur alongside, and possibly embodied in increases in their immigrant population (Parrotta et al, 2014). demonstrate that this issue is not merely theoretical: in a sample of around 300 of the most innovative hightechnology firms in the USA, they show that the hiring of young immigrant workers is associated with increases in the skills available to the enterprise.…”

Is innovative firm behavior correlated with age and gender composition of the workforce? Evidence from a new type of data for German enterprises

“…In the context of innovations, we should also expect a negative correlation with age, because the literature about age-dependent skill formation suggests that age has a negative effect on human capital investments (e.g., due to decreasing amortization periods) and on cognitive skills such as intelligence, memory power, reasoning, creativity, and fluid problem-solving skills (e.g., Kaufman 2001;Pfeiffer and Reuß 2008), which are important for innovative activities. Previous studies, which use firm level data, find indeed that (old) age has a negative effect on firms' innovation activities (e.g., product and process innovations, patents) (e.g., Schneider 2008 for Germany, Parrotta et al 2012 for Denmark). The demographic change makes it also necessary to activate female labor supply.…”